Journal ArticleDOI
Moral Hazard in Teams
TLDR
In this article, the authors study moral hazard with many agents and focus on two features that are novel in a multiagent setting: free riding and competition, and show that competition among agents (due to relative evaluations) has merit solely as a device to extract information optimally.Abstract:
This article studies moral hazard with many agents. The focus is on two features that are novel in a multiagent setting: free riding and competition. The free-rider problem implies a new role for the principal: administering incentive schemes that do not balance the budget. This new role is essential for controlling incentives and suggests that firms in which ownership and labor are partly separated will have an advantage over partnerships in which output is distributed among agents. A new characterization of informative (hence valuable) monitoring is derived and applied to analyze the value of relative performance evaluation. It is shown that competition among agents (due to relative evaluations) has merit solely as a device to extract information optimally. Competition per se is worthless. The role of aggregate measures in relative performance evaluation is also explored, and the implications for investment rules are discussed.read more
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Yardstick Competition to Tame the Leviathan
TL;DR: In this article, the disciplining role of elections under asymmetric information when voters have to rely on relative performance evaluation to tame the Leviathan has been analyzed, and it is shown that the power of voters is strengthened in some sense by the two party system if each party has a uniform leadership which determines policies in all regions.
Posted Content
Slotting Allowances and Manufacturers' Retail Sales Effort
TL;DR: In this article, the authors show that even a retailer with complete bargaining power may actually find it optimal to pay the manufacturer a franchising fee if demand is highly sensitive to the manufacturer's non-contractible sales effort.
Journal ArticleDOI
The price of doing good: Executive compensation in nonprofit organizations
TL;DR: The authors examines the foundational assumption that nonprofit organizations operate under a non-distribution constraint, which prohibits the paying out of excess earnings and requires instead their shareholders to be paid out of their excess earnings.
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Le mimétisme fiscal : une application aux Régions françaises
TL;DR: In this paper, a concurrence par comparaison approach is proposed and teste empiriquement on les regions francaises in order to achieve convergence des taux d'impot a un niveau plus eleve que le niveaux efficace.
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Investment in concealable information by biased experts
TL;DR: In this article, the authors study a persuasion game in which biased experts strategically acquire costly information that they can then conceal or reveal, and they show that information acquisition decisions are strategic substitutes when experts have linear preferences over a decision maker's beliefs.
References
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Posted Content
Production, information costs, and economic organization
Armen A. Alchian,Harold Demsetz +1 more
TL;DR: In this paper, the authors present a set of reprint articles for which IEEE does not hold copyright. Full text is not available on IEEE Xplore for these articles, but full text can be found on the Internet Archive.
Journal ArticleDOI
Moral Hazard and Observability
TL;DR: In this article, the role of imperfect information in a principal-agent relationship subject to moral hazard is considered, and a necessary and sufficient condition for imperfect information to improve on contracts based on the payoff alone is derived.
Posted Content
The Economic Theory of Agency: The Principal's Problem.
TL;DR: The canonical agency problem can be posed as follows as discussed by the authors : the agent may choose an act, aCA, a feasible action space, and the random payoff from this act, w(a, 0), will depend on the random state of nature O(EQ the state space set), unknown to the agent when a is chosen.
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Reexamination of the perfectness concept for equilibrium points in extensive games
TL;DR: The concept of perfect equilibrium point has been introduced in order to exclude the possibility that disequilibrium behavior is prescribed on unreached subgames [Selten 1965 and 1973]. Unfortunately this definition of perfectness does not remove all difficulties which may arise with respect to unreached parts of the game.
Journal ArticleDOI
Good News and Bad News: Representation Theorems and Applications
TL;DR: In this article, a notion of "favorableness" of news is introduced, characterized, and applied to four simple models: the arrival of good news about a firm's prospects always causes its share price to rise, more favorable evidence about an agent's effort leads the principal to pay a larger bonus, buyers expect that any product information withheld by a salesman is unfavorable to his product, and bidders figure that low bids by their competitors signal a low value for the object being sold.